Real Money

Web.com Reports Second Quarter 2013 Financial Results

Second quarter revenue and profitability exceeded high end of guidance

Added 25,700 net new subscribers

Average Revenue Per User of $14.09 grew $0.20 sequentially

Deployed strong cash flow to reduce debt balance by $31.5 million in second quarter

JACKSONVILLE, Fla., Aug. 1, 2013 (GLOBE NEWSWIRE) -- Web.com Group, Inc. (Nasdaq:WWWW), a leading provider of internet services and online marketing solutions for small businesses, today announced results for the second quarter ended June 30, 2013.

"Web.com posted strong results for the second quarter, with both revenue and profitability exceeding the high end of our guidance," said David Brown, Chairman and CEO of Web.com. "We are delivering on our strategy of consistently and profitably adding net subscribers, generating average revenue per user expansion across our three million plus subscribers and achieving best-in-class customer retention levels."

Brown added, "We see a long runway of opportunity in cross-selling and up-selling our substantial installed base of domain name customers with our higher value-added services. We believe that Web.com is well positioned to accelerate revenue growth as we exit 2013, making progress toward our longer-term target of low-teens revenue growth. We also continue to generate substantial profitability and cash flow, enabling the company to continue investing in growth initiatives and at the same time de-leveraging our balance sheet."

Summary of Second Quarter 2013 Financial Results:

Total revenue, calculated in accordance with U.S. generally accepted accounting principles (GAAP), was $120.4 million for the second quarter of 2013, compared to $98.9 million for the second quarter of 2012. Non-GAAP revenue was $131.4 million for the second quarter of 2013, up 8% on a year-over-year basis and above the high end of the company's guidance range of $130.0 million to $131.0 million.

GAAP operating income was $1.9 million for the second quarter of 2013, compared to an operating loss of $11.2 million for the second quarter of 2012. Non-GAAP operating income was $34.4 million for the second quarter of 2013, an increase from $33.7 million for the second quarter of 2012 and representing a non-GAAP operating margin of 26%.

GAAP net loss from continuing operations was $9.7 million, or ($0.20) per diluted share, for the second quarter of 2013. GAAP net loss from continuing operations was $19.1 million, or ($0.41) per diluted share, in the second quarter of 2012. Non-GAAP net income from continuing operations was $26.4 million for the second quarter of 2013, or $0.51 per diluted share, up 34% on a year-over-year basis and above the company's guidance of $0.48 to $0.49 per diluted share. The Company had non-GAAP net income of $19.1 million, or $0.38 per diluted share, for the second quarter of 2012.

Adjusted EBITDA was $37.5 million for the second quarter of 2013, an increase from $35.7 million for the second quarter of 2012, and representing a 29% adjusted EBITDA margin.

The Company generated cash from operations of $33.4 million for the second quarter of 2013, an increase of more than 100% compared to $16.4 million of cash flow from operations for the second quarter of 2012.

Second Quarter and Recent Business Highlights:

Web.com's total net subscribers were approximately 3,056,000, at the end of the second quarter of 2013, up approximately 25,700 from the end of the first quarter.

Web.com's average revenue per user (ARPU) was $14.09 for the second quarter of 2013, representing a sequential increase of $0.20 from $13.89 for the first quarter of 2013.

Customer churn was approximately 1% for the second quarter of 2013, consistent with record low levels.

Conference Call Information

Management will host a conference call today, August 1, 2013, at 5:00 p.m. ET, to discuss Web.com's second quarter financial results and current business outlook. There will be an accompanying slide presentation which will be available on the Investor Relations page of Web.com's website ( http://ir.web.com ), along with a live webcast and replay of the call. To access the call, dial 877-407-3982 (domestic) or 201-493-6780 (international). A replay of this conference call will be available until August 8, 2013 at 877-870-5176 (domestic) or 858-384-5517 (international). The replay conference ID is 416778.

About Web.com

Web.com Group, Inc. (Nasdaq:WWWW) provides a full range of Internet services to small businesses in order to help them compete and succeed online. Web.com is a global domain registrar and further meets the needs of small businesses anywhere along their lifecycle with affordable, subscription-based solutions including website design and management, search engine optimization, online marketing campaigns, local sales leads, social media, mobile products, eCommerce solutions and call center services. For more information, please visit www.web.com ; follow the company on Twitter @webdotcom or on Facebook at www.facebook.com/web.com .

Note to Editors: Web.com is a registered trademark of Web.com Group, Inc.

Use of Non-GAAP Financial Measures

Some of the measures in this press release are non-GAAP financial measures within the meaning of the SEC Regulation G. Web.com believes presenting non-GAAP measures is useful to investors, because it describes the operating performance of the company, excluding some recurring charges that are included in the most directly comparable measures calculated and presented in accordance with GAAP. Web.com's management uses these non-GAAP measures as important indicators of the Company's past performance and in planning and forecasting performance in future periods. The non-GAAP financial information Web.com presents may not be comparable to similarly-titled financial measures used by other companies, and investors should not consider non-GAAP financial measures in isolation from, or in substitution for, financial information presented in compliance with GAAP. You are encouraged to review the reconciliation of non-GAAP financial measures to GAAP financial measures included elsewhere in this press release.